Ensuring the Fiscal Sustainability of Health Care Reform

Abstract

Much of the recent health care reform debate has focused on achieving budget neutrality over a 10-year period, but this goal is less important than the reform's long-run fiscal sustainability. If the rate of growth of health care spending continues to exceed the rate of income growth by its historical margin of more than 2 percentage points, the consequences for beneficiaries, federal and state budgets, and the entire economy — given the implied increase in tax rates and forgone consumption — will be dire.¹ For this reason, health care reform is an economic issue as much as, if not more than, a health issue.